RESULTS First Half 2010

Transcription

1 RESULTS First Half August 2010

2 CONTENTS 1. Summarised conclusions.. page 3 2. Group Evolution 1H H page Main metrics and evolution page Streamlining Plan page Business geographical development....page Restructuring plan for French investee company Reprotechnique (Service Point 51%)...page 7 3. Growth through acquisitions....page Growth plan. page 8 4. Outlook....page 8 2

3 1. Summarised conclusions Service Point s revenues and results in the first half of the year show a positive evolution in line with our forecast of sustained improvement throughout the 2010 financial year and compared to the second half of Revenues in the first half reached EUR million and reduce the differential with 2009 by 6.3% versus a fall of 10.9% in the first quarter. Specific revenues in Q compared to Q significantly reduced their contraction to only 1.2%, posting net sales growth in June 2010 (+1.1%). This development of sales shows the progressive impact of measures adopted, which also translates into a sustained improvement in comparable margins for services rendered. In June 2010, five of the eight countries where Service Point has a presence registered increased sales in spite of the weakness still experienced by the AEC (architecture, engineering and construction) segment, which was offset by growth in print by order, education (which is proving to be anti-cyclical with new contracts in Germany and England) and finance (+28% in June compared to the same period last year). The evolution of contracts and client portfolio together with the continuous cost-saving measures adopted leave us confident in finishing the year with a sales level exceeding that of 2009 and major growth at EBITDA and EBIT levels. EBITDA as at 30 June 2010 amounted to EUR 8 million, representing also an advance in the reduction of margins with respect to the previous year. Notably, all countries where the Group is active, excluding our investee French company Reprotechnique, have made a positive contribution to the company s EBITDA. EBIT (earnings before interest and taxes or operating profit) for the second quarter exceeds the figure obtained in the same period last year. On 3 August, the shareholders of Reprotechnique (Service Point 51%) have formally applied for a Redressement Judiciaire, a process aimed at undertaking an in-depth operating and financial review to make the said subsidiary viable as soon as possible. Lastly, as announced by the company in its Annual General Meeting, it is selectively negotiating its growth phase in the two areas defined as key for the Group s development, namely Scandinavia and Germany. We expect to be in a position to complete our first acquisition of 2010 at the end of the third quarter. 3

4 2. Developments in the first half of Main metrics and evolution Our commercial focus, the strengthening of some economies and an increase in our clients activity basis have allowed us to improve the progress of our revenues in the last few quarters. Table 1.1 Evolution of sales in 2010 vs. same period 2009 Leverage of the business model of our subsidiary in England in order to develop a global presence in the financial segment continues to perform well, with growth of +28% in June compared to the same period last year. This sector, together with education, through the development of specific solutions by Service Point, are the two main sources of growth for the company at present. To a lesser extent, the Industrial, Public and Corporate sectors are showing clear signs of recovery. These developments should enable sales at the end of 2010 to exceed the 2009 figure. The performance of these segments must consolidate throughout the year, offsetting the weakness in the AEC (Architecture, Engineering and Construction) sector. Table 1.2 below shows the main metrics of Service Point over the last three quarters: Table 1.2 Income Statement 2009/2010 Euro 000s 1H S2009 1H 2010 Sales 112, , ,765 Gross Margin 77,007 69,137 71,384 EBITDA 9,903 3,818 8,024 EBIT 2,876-2,609 2,398 Net Profit 867-7, Gross Margin 68.3% 66.7% 67.5% EBITDA 8.8% 3.7% 7.6% EBIT 2.5% -2.5% 2.3% 4

5 Euro 000s 1Q2009 2Q2009 1Q2010 2Q2010 Sales 58,688 54,131 52,256 53,509 Gross Margin 40,150 36,857 35,396 35,988 EBITDA 5,867 4,036 4,357 3,667 EBIT 1,842 1,034 1,348 1,050 Net Profit % Change 1Q10/1Q09 2Q10/2Q09 1H10/1H09 Sales (11.0) (1.2) (6.3) Gross Margin (11.8) (2.4) (7.3) EBITDA (25.7) (9.1) (19.0) EBIT (26.9) 1.5 (16.7) The performance of Service Point s EBIT was satisfactory in the second quarter of 2010, with higher results compared to the same period in Table 1.3 Evolution of EBIT 2Q2009/1H 2010 ( 000s) The Group continues to exercise tight control of its investments in equipment and technology (capex). During the present financial year, its capex has been reduced by 44% with respect to 2009, only undertaking investments in projects that are subject to contracts. By way of reminder, the duration of the Service Point Solutions contracts ranges between three and five years, and they are renewed at a rate exceeding 95% Streamlining Plan During 2010, the company has continued to optimise the cost structure it started to successfully implement at the end of 2008, which has already allowed it to obtain annualised savings exceeding EUR 21 million. 5

6 During the first half of the year, staff expenses have continued to decrease with respect to the two preceding half years, as may be seen in the following chart. Table 1.4 Evolution of operating costs 1Q2009/1Q201 ( 000s) The company continuously pursues savings to improve its margins and increase its operating results. Over the next two quarters, it will focus on centralising cost items affecting the entire Group, such as maintenance, purchase of paper and acquisition of equipment. From a viewpoint more focused on operating components, it will pursue measures aimed at increasing efficiency and productivity based on a better management of its labour costs. 2.3 Business geographical development The quarter-on-quarter comparison shows a progressive improvement in the reported period. In addition, all countries but France with Reprotechnique, owned as to 51% by Service Point make a positive contribution to the company s EBITDA. Norway, the United Kingdom, the Netherlands and the United States have become in the first half of the 2010 financial year the main contributors to the Group s cash flow generation. Germany, Spain and Belgium continue to progressively increase their activity; in particular, the Spanish subsidiary registered a 15% increase in revenues in June compared to the same month in Thanks to B2B E-commerce solutions recently implemented, clients loyalty has increased, as has done coverage to offer new services, which are fostering improved results in countries with lower growth at present. At the same time, the services range has been enhanced, such as printing by order, printing of variable data and printing of posters. 6

7 The contribution to the company s EBITDA by country is as follows: Table 1.5 Contribution to EBITDA by country 1H 2010 ( 000s) Notably, all countries are showing signs of stabilisation and progressive improvement of their revenues and overall results. 2.4 Restructuring plan for the French subsidiary Reprotechnique (Service Point 51%) The shareholders of Reprotechnique, a French company where Service Point holds a 51% stake acquired in June 2008, have formally applied for a "Redressement Judiciaire", a process aimed at redressing the company s economic trend and undertaking a plan to make the said subsidiary viable whilst not entailing an additional financial burden on shareholders funds. If this French subsidiary were no longer fully consolidated into Service Point s results, the 2009 EBITDA would have been EUR 1.4 million higher, and EUR 0.6 million in the first half of The purpose of the Redressement Judiciaire is to undertake an in-depth operational and economic restructuring by maintaining only profit making centres and restructuring or closing those that are loss making. The process enables to freeze the company s creditors item and be able to duly negotiate in order to manage a financially viable company. On this basis, the French market continues to be of interest for Service Point. The Reprotechnique subsidiary is the only Service Point unit that has had negative operating results in 2009 and Drastic measures are being adopted in order to redress this situation, in order to avoid the possibility of the said results reducing the Group s income and with the ultimate purpose of generating cash flow after implementing the viability plan. Reprotechnique is estimated to remain in the Redressement Judiciaire status for a year, during which period the company will continue operating and servicing its clients as it has done to date. This decision is made in order to protect the shareholders and avoid a negative effect on the Group s cash position as well as its results. Through this restructuring, the subsidiary owned as to 51% by Service Point may emerge strengthened in the French business. 7

8 3. Growth through acquisitions 3.1 Growth plan As announced at the last AGM, Service Point intends to recover the path of growth by means of strategic acquisitions of sound and long-standing companies carried out at attractive valuation multiples. At present, Service Point is at the stage of the legal and accounting due diligence of an acquisition the results of which are satisfactorily progressing; the target company s integration, before taking into account economies of scale and synergies of costs and revenues, makes a positive contribution to all metrics of Service point s income statement and balance sheet. The two areas defined as key by the company s Board of Directors are Scandinavia and Germany, in view of their possibilities, growth opportunities and healthy performance in our activity sector. On the other hand, from a strategic viewpoint, our subsidiaries in Norway and Germany show a greater degree of synergies with the studied companies. We reckon that this acquisition will be completed by the end of the third quarter. 4. Outlook The Group s sales continue to reduce the differential with 2009, and specific revenues of Q compared to Q considerably reduced their contraction down to only 1.2%, recording net growth in sales in June 2010 (+1.1%). The management team mainly focuses on increasing the trend of revenues reached in June, with organic growth in the last two quarters of the year allowing to surpass the sales obtained in The efforts made in the management of sales costs items and of operating improvements through increased efficiency and management of labour costs, as explained above, must allow to again attain a better comparison of costs in 2010 versus the very important one achieved in 2009, which will therefore have a bearing in a better performance of EBITDA and EBIT for the full year. In addition, Service Point will focus on accelerating its presence in sectors offering a high growth potential and where the Group may benefit from its international capillarity, in order to offer new services such as the segments of printing by order, financial and education. These segments will offset the weakness still shown by the AEC sector and will contribute to the growth speed of Service Point s organic revenues to become clearly visible. The decision made with respect to our French subsidiary in order to place the company on a Redressement Judiciaire position intends to allow undertaking a major viability plan and limiting the exposure of its shareholders financial resources. 8

9 Lastly, the possible and expected acquisition of the company currently under study and other acquisitions in which we have started to work in our areas of interest shall mean to again provide Service Point with a major vector of growth and generation of results. 9